NISM Certifications · NISM-Series-VI: Depository Operations
Functions of Depository Participant: Account Opening Explained
A depository participant (DP) is the agent of a depository that opens and runs demat accounts for investors. Account opening means taking a signed account opening form, verifying KYC and PAN, and creating the account with a unique client ID. For the exam, learn who can open which account and what documents apply.
What this chapter covers
This chapter covers the first service a depository participant gives an investor: opening a demat account. It explains the types of accounts, who can hold them, the account opening form, the agreement between DP and client, and the KYC and PAN checks that must be done before the account goes live.
It then moves to how different holders operate accounts. Joint, minor, corporate and NRI accounts each have their own rules on who signs, who can be a holder and what extra papers are needed. The chapter ends with nomination, power of attorney and changes to account details after opening.
This chapter is the base for the rest of the paper. Later chapters on transactions, settlement, pledge, statements and charges all assume an account already exists and is correctly set up. If you know how an account is opened and who may operate it, the later operational rules are easier to follow.
Account opening is the core daily work of a DP, so NISM-Series-VI questions here test exact rules rather than general ideas. The exam is 100 questions in 2 hours with a 60% pass mark and negative marking of 25% of the marks assigned to a question, so a half-remembered rule can cost you marks. Questions are usually direct: which document, who signs, who can be a holder. If you learn the rules cleanly, these are among the easier marks to secure, and the same knowledge helps in later operational chapters.
Functions of Depository Participant - Account Opening: topics in the order to study them
- 1Types of Demat Accounts and Account HoldersStart here to know the kinds of accounts and holders, because every later rule depends on who the holder is.
- 2Account Opening Procedure and Account Opening FormNext, learn the step-by-step process and the form, which is the common path for all account types.
- 3KYC, PAN and Documentary RequirementsOnce you know the procedure, learn the identity, address and PAN checks that must be completed within it.
- 4Operation of Joint, Minor, Corporate and NRI AccountsNow apply the basics to special holders, where the extra conditions and documents are tested most.
- 5Nomination, Power of Attorney and Account ModificationFinish with what happens after opening: nominee, authorised persons and changes to details, which build on the earlier topics.
How to prepare Functions of Depository Participant - Account Opening
This is a rules-heavy chapter, so aim for exact recall and clear separation between account types.
- Read the chapter once in study order, without memorising, to see the full life of an account from opening to modification.
- Make a one-page table for yourself comparing individual, joint, minor, corporate and NRI accounts: who can hold, who signs, extra documents.
- List the documents for KYC and PAN in your own words, and note any exceptions the workbook mentions.
- Write down every condition word in the rules, such as who, when and in what form, because options often differ by one condition.
- Practise MCQs topic by topic, and for each wrong answer note which condition you missed.
- Do a timed mixed set at the end, skipping questions you cannot narrow down, since wrong answers carry negative marking.
Common mistakes in Functions of Depository Participant - Account Opening
Mixing up rules for joint, minor and NRI accounts
Fix: Keep a comparison table and revise it by account type, not by rule.
Memorising documents without knowing their purpose
Fix: Tag each document as proof of identity, address or PAN, and answer from that purpose.
Confusing nomination with power of attorney
Fix: Remember: a nominee gets the securities after the holder's death; a power of attorney holder acts for the holder in operating the account.
Ignoring one-word conditions in options
Fix: Underline condition words in the question and check each option against them.
Guessing numbers or timelines not in the workbook
Fix: Use only workbook rules, and leave the question if you cannot narrow it down, given negative marking.
Last-day revision: Functions of Depository Participant - Account Opening
- A DP is the depository's agent and opens demat accounts for investors.
- An investor needs an account with a DP to hold securities in electronic form.
- The account opening form and the DP-client agreement are both required to open an account.
- Each account gets a unique client ID, and the DP ID plus client ID identify it.
- PAN and KYC verification are required before the account is activated.
- Know the difference between holders of an individual, joint, minor, corporate and NRI account.
- A minor account is operated by a guardian; check the workbook for the exact conditions.
- Corporate accounts need authorised signatories supported by a board resolution.
- Nomination lets the holder name who receives the securities on death.
- A power of attorney authorises another person to operate the account on the holder's behalf.
- Changes to address, bank or signature need a request with supporting proof.
- Check each rule's condition words before choosing an option.
Functions of Depository Participant - Account Opening practice questions
- Meera and her husband Arun open a joint demat account in the order Meera, Arun. Which statement about the holders' status is correct?
- A client opens a demat account and does not wish to give a nomination. What must the DP do?
- A DP is opening a Basic Services Demat Account (BSDA) for Mr. Dinesh Pillai, who already holds a regular demat account with another DP. Whic…
- Mr. Arvind Mehta wants to open a demat account with a DP. Under the standard account opening process, who must be given a copy of the execut…
- Mr. Sanjay Gupta is a small investor holding few securities with low value. He asks the DP for a facility with reduced annual maintenance ch…
- Mr. Arjun Mehta wants to open a demat account and submits his PAN card photocopy. The DP's officer compares it with the original and records…
- A DP wants to close a client's demat account on the DP's initiative because the client has not paid charges. Which statement is correct as p…
- Ramesh, a resident individual, wants to open a demat account with a depository participant (DP). Under the depository regulations, which of …
Functions of Depository Participant - Account Opening in other exams
The same ground in other exams, if you are preparing for more than one or want another angle on it.
Functions of Depository Participant - Account Opening: frequently asked questions
What is the role of a depository participant in opening a demat account?
The DP acts as the depository's agent and deals directly with the investor. It collects the account opening form, verifies KYC and PAN, signs the agreement and creates the account. The investor never deals with the depository directly for this.
Is there negative marking in NISM-Series-VI?
Yes. Wrong answers carry negative marking of 25% of the marks assigned to the question. The exam has 100 questions, 100 marks and 2 hours, and the pass mark is 60%.
Which topic should I learn first in this chapter?
Start with the types of demat accounts and account holders. Every later rule, from KYC to nomination, depends on who the holder is.
How should I revise joint, minor, corporate and NRI accounts?
Use one comparison table covering who can hold, who signs and which extra documents are needed. Revise it often and test yourself with short MCQ sets on each account type.